1. LEGAL SYSTEM

The Republic of Bulgaria is a parliamentary republic. The Bulgarian Constitution adopted in 1991 provides for the separation of powers between the legislative, executive and judicial pillars. The Constitutional Court is charged mainly with the interpretation of the Constitution and control over the compliance of the laws adopted by the National Assembly – the Parliament with the Constitution, as well as to check on the conformity of any international treaties concluded by the Republic of Bulgaria with the Constitution prior to their ratification.

The Bulgarian court system consists of Regional Courts, District Courts, Military Courts, Specialized Criminal Court, Courts of Appeal (including an Appellate Specialized Criminal Court and Military Court of Appeal), the Supreme Court of Cassation (the judicial instance, dealing with civil, commercial and criminal cases as cassation instance) and the Administrative Courts and the Supreme Administrative Court (the administrative jurisdictions, dealing with administrative cases). Bulgaria is an EU Member State since 1 January 2007, thus it is party to the EU Treaties and should implement and comply with EU law.

Litigation in civil and commercial cases, and the recognition and enforcement of judgements and other acts of competent authorities of EU Member States is governed by the Civil Procedure Code (promulgated in State Gazette Issue No. 59/20.07.2007, in force as of 1 March 2008, as amended from time to time). Administrative disputes are handled according to the Administrative Procedure Code (promulgated in State Gazette issue No. 30/11.04.2006, as amended from time to time).

The competence of the Bulgarian Courts over disputes with an international element, and the recognition and enforcement of foreign judgements and other acts is regulated by the Private International Law Code (promulgated in State Gazette Issue No. 42/17.05.2005, as amended from time to time) and the other applicable EU legislation, including Regulation (EU) No 1215/2012, of the European Parliament and of the Council of 12 December, 2012, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I Recast).

The Bulgarian Regional and District Courts are competent for both civil/commercial and criminal cases. The jurisdiction of the courts with respect to civil and commercial cases is determined based on the type of claims, permanent domicile or seat of the defendant, the amount of the dispute, etc.

The Regional Courts have general jurisdiction to decide civil and criminal matters. Regional Courts may also act as an appeal instance against administrative penalty rulings.

The District Courts can be both first and second instance courts. At first instance, District Courts generally have the competence to decide upon the following:

-claims to establish or challenge parentage, to terminate adoption, any claims for imposing judicial disability to individuals or for revocation of such judicial disability;

-claims for ownership and other rights in rem in respect to immovable property where the value of the claim exceeds BGN 50,000 (approximately EUR 25,564);

-claims in civil and commercial cases where the value of the claim exceeds BGN 25,000 (approximately EUR 12,782), with the exception of any claims for alimony obligations, for labour disputes, and for receivables due to deficiency in accounts;

-claims to establish inadmissibility or nullity of a registration (for instance in the Commercial Register or the Real Estate Register), as well as for non-existence of a registered circumstance, where explicitly provided for in a law;

-claims, regardless of their value, which are joined in a single claim request containing at least one claim, for which a district court would be competent; and

-any claims which, under other laws, are subject to examination by the district court.

All other claims should be reviewed by the Regional Courts as first instance courts.

District Courts are also competent to decide upon, as a second instance, appeals against first instance decisions of the Regional Courts within their jurisdictional area.

The Courts of Appeal are competent to decide upon, as a second instance court, appeals against first instance decisions of the District Courts within their jurisdictional area.

In Bulgaria currently there are 28 District Courts and 5 Courts of Appeal.

Some particular criminal cases (e.g. for corruption, organized crime etc.) are referred to the Specialized Criminal Court and the Specialized Criminal Court of Appeals, both situated in Sofia.

With the exception of administrative matters, the Supreme Court of Cassation acts as a court of cassation and exercises supreme judicial control over the unfair, inaccurate or contradictory application of the law by the inferior courts. The decisions and decrees issued by the Supreme Court of Cassation and the Supreme Administrative Court are final and binding, with some very limited exceptions. The final decisions and rulings could be subject to annulation upon very limited grounds.

Administrative Courts are competent to hear all cases concerning:

-issuing, amending, terminating or declaring administrative acts as invalid;

-declaring agreements concluded between an individual/legal entity with administrative authorities with respect to administrative cases as invalid;

-protection against unjustified actions and/or omissions of the administrative authorities;

-protection against unlawful compulsory enforcement of administrative acts;

-indemnity for damages arising out of unlawful acts or omissions committed by administrative authorities;

-indemnity for damages arising out of compulsory enforcement; and

-establishing the lack of authenticity of administrative acts.

There are 28 Administrative Courts in Bulgaria.

The Supreme Administrative Court exercises supreme judicial control over the application of the law with respect to administrative matters. The Supreme Administrative Court is also competent to act both as a first and cassation instance where provided by law. The Supreme Administrative Court is competent to hear claims as first instance with respect to:

-appeals against secondary legislation, except for those issued by the Municipal Councils;

-appeals against administrative acts issued by the Council of Ministers, the Prime Minister, the Deputy Prime Ministers or other Ministers;

-appeals against decisions issued by the Supreme Judicial Council; and

-appeals against administrative actions of the bodies associated with the Bulgarian National Bank.

Simultaneously, the Supreme Administrative Court acts as a cassation instance with respect to:

-complaints and appeals against court decisions rendered by the Administrative Courts at first instance; and

-requests for annulment of acts issued in Administrative Court cases.

Business crimes are regulated by the Bulgarian Criminal Code (promulgated State Gazette issue No. 26/02.04.1968, as amended from time to time). The Criminal Code contains general rules regarding criminal offences in Bulgaria, as well as the specific qualifications for each crime.

The Criminal Code is applicable to all Bulgarian citizens, as well as foreigners who are resident on Bulgarian territory or territory under Bulgarian jurisdiction (with the exception of foreigners covered by immunity provisions). Under the Bulgarian penal system the principle of innocent until proven guilty is in place.

Under Bulgarian law, legal entities (private corporations, institutions, NGOs, etc.) are not subject to criminal liability. They are allowed to participate in the criminal process only to the extent of claiming damages, in case they are victims of crimes (as "civil plaintiffs").

Most business crimes are set out in the chapter of the Criminal Code entitled "Crimes against the economy". However, some crimes, which are not closely related to business, are placed in other chapters of the Criminal Code, e.g. common cases, such as fraud or asset misappropriation, but also crimes against creditors, banks and tax systems.

According to Bulgarian penal legislation it is illegal for a manager to conclude deals when it is known in advance that these deals will damage the interests of the company or its creditors. Bribery, regardless of whose initiative it is, is also considered a crime. If a legal entity is insolvent, but the respective District Court is not notified within 30 (thirty) days of the actual insolvency, the manager and/or accountants may be prosecuted. The same applies for managers, assignees and other persons who destroy documents related to insolvency and jeopardize the performance of the respective procedures.

Business crimes also include crimes against the customs regime such as, among others, storage and distribution of excise goods with unpaid excise, import and export of goods without payment of the due taxes and fees and violations of the customs notification and registration regimes. Bulgarian legislation prohibits the counterfeiting of papers, money, payment and bank documents, their distribution and usage. Money laundering and other violations of the Act on measures against money laundering (promulgated State Gazette issue No. 85 of 24.07.1998, as amended from time to time) are also prosecuted under Bulgarian law. Persons are not allowed to prepare and use fake documents and to conduct illegal activities which may lead to their or their company's exemption from tax obligations.

Fraud and misappropriation of EU funds may also be considered a business crime in Bulgaria. The procedures for investigating the committed crimes, the perpetrators and the caused damage are mainly addressed in the Criminal Procedure Code (promulgated State Gazette issue No. 86/28.10.2005, as amended from time to time). The Criminal Procedure Code also contains rules regarding the conduct of investigations and the court procedures in a criminal process.

The criminal procedure in Bulgaria is divided into two phases. In the first phase an investigation is conducted to determine the specific facts and qualifications of the crime, including the identity of the perpetrators and the victims and the respective damages. The investigation authorities (the police, customs officers, as well as officers of other public institutions, such as the National Investigation Service, State Agency "National Security" etc.) are the active authorities in this phase. The process is supervised by a public prosecutor from the competent Prosecution office. It may be the Regional Prosecution office, the District Prosecution office or the Specialized Prosecution office, depending on the type of crime.

Once the pre-trial phase begins the investigation authorities are allowed, under the conditions of the Criminal Procedure Code, to search for and collect evidences in offices, houses or other places and/or people, to question witnesses, etc. in order to find out the actual occurrence of events. During the investigation the defendant should be provided with and made aware of all documents and prosecution acts. The investigating bodies should collect not only incriminating, but also exculpatory evidence.

The investigation should be completed and the file should be sent to the prosecutor within 2 (two) months at the latest as of the date of initiating an investigation. However, in cases of significant complexity the investigation may be extended by a further 4 (four) months as many times as necessary, as long as the absolute time limitation for the prosecution of the crime has not expired. When enough evidence is collected or it is not possible to collect further evidence, the competent supervising public prosecutor decides whether to file the prosecution act in the respective court, or to dismiss the case.

Once the prosecution act is at the court, the second, judicial phase begins. In this phase the court reviews the evidence, questions witnesses and hears the defendant and the public prosecutor. This should happen in a reasonable period of time, but case duration may significantly differ. The court panels consist of either one or three judges depending on the severity and type of crime. After the court hearings are concluded the court decides whether the defendant is guilty, not guilty or whether the case needs more investigation. If the defendant is found guilty, the respective sentence should also be rendered by the court based on the court file. Sentences may be appealed before the respective second instance courts (Appeal Court when the case has been heard at first instance by a District Court; or a District Court when the case has been heard at first instance by a Regional Court). The appeal decision may be subject to further cassation appeal (only on points of law and not on points of fact) before the Supreme Court of Cassation.

Bulgarian legislation provides two ways to protect harmed persons or legal entities. During the judicial phase of the crime process, persons and legal entities are allowed to file civil claims against the defendant in the same court case with a request for compensation for the caused damage. Another option is to file a new court claim before the respective civil court and to initiate an independent proceeding.

The costs for the case are borne by the defendant if found guilty. The "civil claim" costs are also borne by the defendant if the court sustains the claim.

The duration of a criminal process in Bulgaria depends on the specifics of each case, but usually lasts from 18 (eighteen) months to 3 (three) years.

In Bulgaria insolvency proceedings may be initiated with respect to commercial companies and individuals acting as sole traders and cooperatives. A limited number of entities with the status of a public enterprise (e.g., special purpose legal entities fully owned by the state), which are either granted a state monopoly, or established under special legislation, are outside the scope of insolvency laws. There is no insolvency of individuals in Bulgaria, except for those conducting a business as sole proprietors or general partners.

Insolvency proceedings are regulated by the Commercial Act (promulgated in State Gazette Issue No. 48/18.06.1991, in force as of 1 July 1991, as amended from time to time). Additionally, there are sector- specific laws that apply to the insolvency of banks, insurance companies, pension funds and funds of management companies.

Bulgarian insolvency law does not legally differentiate between different types of proceedings. Each process begins by the filing of a claim for opening insolvency proceedings with the competent insolvency court. However, this single-entry may have multiple exits depending on the particular circumstances. The three main categories of possible exits are as follows:

-restructuring of the debtor;

-insolvency of the debtor, which is followed by a liquidation procedure; and

-agreement between the creditors and the debtor.

An agreement between all creditors with accepted and undisputed claims and the debtor may be undertaken (at any stage of the proceedings) without the assistance of the Administrator. The insolvency court's involvement is limited to supervision of the legality of such agreement and its approval.

A petition for initiating insolvency proceedings must be filed when the debtor is over-indebted or illiquid. Insolvency proceedings based on over-indebtedness can only be initiated for corporations, i.e., for limited liability companies, joint stock companies and partnerships limited by shares.

If the company is in a liquidation procedure, the debtor and the liquidator are required to file a petition for initiating insolvency proceedings upon the occurrence of Illiquidity or over-indebtedness. The filing obligation is incumbent on the managing bodies of the debtor, and further on the sole traders and their heirs. Non-compliance with this requirement may trigger civil and criminal liability of the relevant responsible person.

The creditors and the National Revenue Agency may choose when (and whether) to initiate insolvency proceedings. Only creditors of "commercial transactions" are entitled to initiate proceedings and there has been a considerable amount of litigation on this definition.

By law, the debtor is required to file for insolvency within 30 (thirty) days of first becoming illiquid or over- indebted. Within that period attempts should be made to remedy the illiquidity or over-indebtedness and if such efforts are unsuccessful, the executive officers are required to file for insolvency.

The District Court where the debtor has its registered seat at the time of filing the application is in charge of ruling on the application for the opening of insolvency proceedings, and of conducting the entire case. The District Court therefore acts as Insolvency Court. The proceedings are conducted before a commercial division judge. The same judge decides all matters related to the insolvency case, except for disputes raised by a creditor or debtor for establishing the existence of a non-approved creditor's claim. In such disputes, a different judge from the same Insolvency Court adjudicates the claim. For companies having their place of registration in Sofia, Bulgaria, the competent Insolvency Court is the Sofia City Court.

As with any other District Court decisions, the rulings and decisions of the Insolvency Court can be appealed before the respective Court of Appeal and, in particular cases, an appeal to the Supreme Court of Cassation is possible.

Bulgarian law provides for a temporary insolvency Administrator to be appointed ("Temporary Administrator"). The Temporary Administrator is appointed by the Insolvency Court prior to the opening of the proceedings if this is necessary for the preservation of the debtor’s property or if it is specified in the initial ruling of the Insolvency Court with respect to the opening of Insolvency Proceedings. The Temporary Administrator will be replaced in the course of the proceedings by a permanent Insolvency Administrator.

All creditors of the debtor shall file their claims with the Insolvency Court within 1 (one) month of the registration with the Commercial Register of the Insolvency Court's decision to initiate insolvency proceedings. Claims are to be filed in writing together with the supporting documentation.

Within a week from the expiration of the above-mentioned period, the Administrator has to prepare a list of all claims filed by creditors (whether justified or not) and include ex officio all payments due to employees and outstanding public liabilities. If a claim is not recognized, the respective creditor is entitled to object to the rejection before the Insolvency Court.

Creditors, who have omitted to file their claims within the 1 (one) month period, may still file claims within 3 (three) months of the registration with the Commercial Register of the Insolvency Court's decision to initiate proceedings. However, the rights of such creditors are restricted, in that they are precluded from objecting to claims already admitted, and such late filers enter into the proceedings as they stand.

Following the expiration of the 3 (three) month period, only claims for debts, which have not been paid when they were due and which only occurred after or on the opening date of the Insolvency Proceedings with regard to the on-going activity of the debtor, can still be filed, following the general procedure of the filing, but no later than the approval of a restructuring plan.

Under the Bulgarian Commercial Act, creditors' claims are to be satisfied from the proceeds of the debtor's assets in the following order of priority:

1.claims secured by a pledge or mortgage, or by a freezing order registered pursuant to the Law on Registered Pledges, out of the proceeds of the assets subject to the relevant security;

2.claims secured by a lien, out of the proceeds of the assets, subject to the lien;

3.administrative expenses (which include the administrator's remuneration, the state fees for the insolvency proceedings, the expenses for the collection, management, valuation and distribution of the insolvency estate, the salaries of employees (if the activity of the company has not been terminated). The law also sets forth that, in general, the expenses up to the opening of the insolvency are also administrative costs. Claims deriving from employment contracts, which have matured before the date of the Insolvency Court's decision on the opening of insolvency proceedings;

4.obligations for the payment of allowances owed by law by the debtor to third parties (applicable only with respect to the rare cases where individuals may be in insolvency);

5.public claims of the State and the municipalities such as taxes, customs duties, fees, obligatory social security contributions, as well as other claims which have emerged prior to the date of the decision on the opening of insolvency proceedings;

6.claims which have occurred after the date of the Court's decision with regards to the opening of insolvency proceedings and which have not been paid at maturity, deriving from the continuing operations of the debtor. Typically these are all expenses arising in connection with the continued operation of the estate, such as the purchase of supplies and services, which do not fall under the definition of administrative costs;

7.other unsecured claims that may have occurred prior to the date of the decision on the opening insolvency proceedings;

8.claims for payment of interest on unsecured receivables accruing after the date of the decision on the opening of insolvency proceedings;

9.claims for repayment of loans granted to the debtor company by a shareholder;

10.claims concerning gratuitous transactions; and

11.claims of creditors for their own insolvency proceedings expenses, except where a creditor has paid the initial expenses for the insolvency proceedings in advance.

All creditors of the company have to present their claims before the Insolvency Court for inclusion in the list of allowed claims prepared by the Administrator. Ex officio added to the list are all salary claims of employees and warrants for public receivables (e.g. taxes, custom duties) which have entered into force. The Administrator has to publish the list. Submitted but disputed claims must be specifically marked. Objections against the claims in this list must be raised before the Insolvency Court within a week of its announcement. In case that there are no objections registered within the statutory term, the Insolvency Court approves the list of allowed claims.

The Insolvency Court is not authorized to make any judgment regarding the allowed claims if they have not been disputed. The only amendments the Insolvency Court can make ex officio are in respect to the general obligation of the Insolvency Court to check for any technical mistakes made by the Administrator, such as names, addresses of the creditors or calculations due to currency exchange. In the case of objections, the Insolvency Court resolves any disputes after reviewing the arguments of the creditors, the Administrator and the debtor. The ruling of the Insolvency Court in the objection procedure is not subject to appeal. However, as described in the following paragraph, further contested proceedings are possible.

If no restructuring plan is adopted, or if the approved restructuring plan is not complied with, the insolvency proceedings continue with the Insolvency Court's decision declaring the company insolvent and terminating its activities. The Administrator will then sell the assets of the company, and distribute the proceeds among the creditors according to the ranking of their claims. In certain exceptional cases, with the prior approval of the Insolvency Court, the assets of the company may be sold in the insolvency proceedings before the final stage of liquidation. After the debtor’s obligations have been paid, or the insolvency estate has been depleted, the company is deleted from the Commercial Register following the Insolvency Court's decision, i.e., the company ceases to exist.

In 2016, the Commerce Act was amended to introduce new stabilization proceedings for merchants at immediate insolvency risk. The provisions became effective as of 1 July 2017. The new proceedings aim to prevent bankruptcy by allowing merchants at such risk to reach an agreement with their creditors on the repayment of obligations and, as a result, to continue their business activities.

The stabilization request shall include, inter alia, a detailed list of the merchant's obligations towards its creditors, an overview of the circumstances due to which the merchant is at immediate risk of insolvency, the reasons for proposing a stabilization plan and a suggestion for the manner, terms and conditions for repayment. The stabilization plan can envisage partial write-off of obligations or deferred payment to creditors. Partial write-off is allowed, if at least 50% of the amount due will be paid. Payments can be deferred for up to 3 (three) years upon completion of the stabilization proceedings.

If the court finds that the merchant is at insolvency risk, the court opens the stabilization proceedings, appoints a trustee (доверено лице) and schedules a court hearing for the review and adoption of the stabilization plan. The court order for opening of stabilization proceedings and the list of the merchant's creditors are announced in the Commercial Register. At this point the court may impose restrains or other preserving measures over the merchant's assets.

Arbitration of commercial and civil disputes is regulated by the International Commercial Arbitration Act (promulgated in State Gazette Issue No. 60/5.08.1988, as amended from time to time, "ICAA"), and applies to all commercial disputes with the exception of disputes for property rights or possession over real estate, rights under an employment agreement or maintenance obligations, which all fall within the jurisdiction of the Bulgarian State Courts, or disputes where consumers are a party to the dispute (i.e., such disputes are not arbitrable). Despite its name, and with the exception of certain provisions, the Act is also applicable to domestic arbitration, i.e., to disputes where all involved parties have their domicile or seat in Bulgaria.

The oldest and most reputable arbitral institution in Bulgaria is the Arbitration Court at the Bulgarian Chamber of Commerce and Industry ("BCCI"), established in 1897. The Arbitration Court resolves commercial disputes, irrespective of whether the seat or domicile of one or both parties is in the Republic of Bulgaria or abroad. It has its own rules of arbitration which are available in Bulgarian, English, French, Russian and German languages, and maintains three lists of arbitrators (one for domestic arbitrations, one for international arbitrations with only Bulgarian arbitrators and one for international arbitrations including foreign arbitrators). The last amendments to the rules for arbitration proceedings were enacted on 1 January 2017.

The parties to a dispute, or a potential dispute, can agree to settle their disputes through arbitration by concluding an arbitration agreement. The arbitration agreement should be in writing or evidenced through a written communication between the parties. The arbitration agreement may be included as a provision in a contract between the parties, in which case it shall be considered independent of the other terms of the contract, or as a separate agreement. An arbitration agreement is also considered to exist if the respondent takes part in the arbitration proceedings without challenging the jurisdiction of the arbitral tribunal, at the latest with the reply to the statement of claim.

Arbitral Tribunals composed under the Rules for Arbitration of the BCCI, can be composed of a sole arbitrator or of three arbitrators. The parties are free to agree upon the procedure for selecting the arbitrator(s), the procedural rules to be followed, the seat of arbitration and the language or languages of the arbitral proceedings.

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of one of the parties, order the other party to take appropriate measures for securing the rights of the petitioner. When ordering such measures, the arbitral tribunal may order the claimant to deposit a security (Section 21 ICAA). However, if a party refuses to cooperate, the interim measures granted by an arbitral tribunal are not enforceable and assistance from the state courts must be requested.

Arbitral tribunals may not order any interlocutory relief or provisional measures on a person or entity who is not a party to the arbitration agreement (e.g., to protect evidence). Such assistance may only be provided by the state courts. Only measures granted by the state courts are enforceable. Only Bulgarian courts have the competence to order such interim measures in the territory of Bulgaria.

An arbitral decision and/or award is binding and enforceable. An arbitral award rendered in an arbitration seated in Bulgaria can be challenged before the Supreme Court of Cassation (set-aside procedure) only under very few grounds, explicitly and imitatively listed in the ICAA. The relevant violations include:

-a party had no legal capacity to act at the time of signing the arbitration agreement;

-the arbitration agreement had not been concluded or it was deemed to be null and void pursuant to the applicable law chosen by the parties;

-a party has not been duly notified of the appointment of the arbitrator(s), or of the arbitration proceedings or was not able to participate in the proceedings for reasons beyond its control;

-the award dealt with a dispute beyond the scope of the arbitration agreement or outside the subject matter of the dispute;

-the composition of the arbitral tribunal or the arbitration proceedings did not conform with the parties' agreement; and

-the subject-matter of the dispute is non-arbitrable.

Once the arbitral award is rendered and has entered into force, a writ for the execution of arbitral awards may be issued by Sofia City Court or the competent district court.

Pursuant to the provisions of the Bulgarian Civil Procedure Code, certain foreign court judgments and arbitral awards can be enforced in Bulgaria.

The law distinguishes between the enforcement of decisions and acts issued by competent foreign authorities of other EU Member States, and the decisions and acts issued by competent authorities of other foreign countries (Third Country Decisions).

Decisions or other acts issued by courts in EU Member States are recognized and directly enforceable through the foreign court ruling, without any additional court proceedings in Bulgaria. Such decisions and/or acts are recognized directly by the respective Bulgarian authority upon the presentation of the decision and enclosed certificate (provided that this is a requirement of an act of the European Union).

When an interested party seeks recognition of a court decision or another act issued in an EU Member State it shall file a request to the District Court at the registered seat or domicile of the responding party (Sofia City Court if the responding party has its seat in Sofia) or, if such address is not within the territory of the Republic of Bulgaria, before the District Court of its own registered seat or domicile.

In case both the requesting party and the responding party have their registered seats or domicile outside the Republic of Bulgaria, the request shall be filed at the Sofia City Court. The Court will then decide upon the recognition of the foreign court decision and/or acts. Following the Court's formal recognition, the foreign judgment or act, issued in an EU Member State, has the same effect as a domestic judgement rendered by a Bulgarian court. The decision on the recognition may also be subject to appeal before the respective Court of Appeal and the Supreme Court of Cassation.

The recognition of a Third Country Decision is performed by the authority before which the request for recognition is submitted. A dispute regarding the conditions for the recognition of a Third Country Decision can be filed with the Sofia City Court.

Generally, Third Country Decisions are recognized by Bulgarian courts providing that the following conditions are met:

-the foreign court or body was competent pursuant to Bulgarian law principles;

-the defendant was served with a copy of the claim, the parties involved were properly summoned and the main principles of Bulgarian law regarding the parties' rights to defend the claims have not been violated;

-there is no decision or pending litigation before a Bulgarian court between the same parties that is based on the same grounds and the same claim; and

-the recognition or enforcement of the Third Country Decision does not contradict Bulgarian public order.

A Third Country Decision becomes enforceable through the filing of a request at the competent District Court (or Sofia City Court) along with a copy of the Third Country Decision. The decision must be certified by the respective foreign court, and a certificate from the same is also required, stating that the decision has entered into force. Those documents are to be translated into Bulgarian, and if required, certified and legalized by the Bulgarian Ministry of Foreign Affairs.

Regarding the enforcement of foreign arbitral awards, Bulgaria is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, with the reservations that the Convention will only be applied to the recognition and enforcement of awards made in the territory of another contracting state, and with regards to those made in the territory of non-contracting states the Convention will only be applied to the extent to which those states grant reciprocal treatment. Bulgaria is also a party to the 1961 European Convention on International Commercial Arbitration.

2. LITIGATION

3. BUSINESS CRIME

4. INSOLVENCY

5. ARBITRATION

6. ENFORCEMENT OF FOREIGN JUDGMENTS AND ARBITRAL AWARDS

7. PRACTICE TIPS

TYPE OF PROCEEDINGS

PROCEDURE AND ASSUMPTIONS

PRACTICE TIPS

Simple cases: 4 - 8 months for one instance.

Complex cases: 12 - 24 months for one instance.

-There is no formal discovery in Bulgaria.

-Documents are subject to disclosure if the party itself referred to the document in the course of the proceedings. The party is obliged to hand over a certified copy of the document.

-A court order to produce such documents is not enforceable. Failure to comply with the order can only be considered by the court in its evaluation of the case.

-The parties to a dispute may request the court to order a third party to provide documents. In case of a refusal by the third party to comply with such a request, the court may impose a fine.

class actions

Mandatory Representation

by Counsel

Yes. There is legal aid for people who cannot afford the costs of legal proceedings.

The Ordinance on the Minimum Attorney Fees does not provide for separate instructions on structuring fees for such claims and therefore the criteria for awarding reimbursement of attorney fees applied by courts follow the standard principles described above.

The Bulgarian Code of Civil Procedure provides for special proceedings for collective claims.

Approximate Costs

COURT FEES

ATTORNEYS’

FEES (NET)

Pro Bono System

-Litigation costs include court fees, attorneys' fees and expenses for expert reports and witnesses.

-Litigation costs are awarded against the losing party which must reimburse the winning party. However, the court may decide to reduce the amount of attorneys' fees to be reimbursed to the levels provided for in the Ordinance on the Minimum Attorneys' Fees.

-If a claimant has been partially successful, the costs of both sides are divided on a pro-rata basis.

-Court fees have to be paid upon filing the claim and evidence of the payment shall be presented to the court together with the claim.

-Usually, lawyers charge higher fees than the minimum ones provided for in the Ordinance on the Minimum Attorneys' Fees.

-In order for a party to be able to claim its attorney fees in a case, it must produce evidence of the effective payment of such fees. It is therefore recommended to proceed with the payment before the oral hearings in the case.

Document Production

STANDARD CIVIL PROCEEDINGS

Court fees depend on the material interest of the claim and whether a special expert report is requested by the parties.

For common cases, court fees amount to 4% of the material interest of the claim. In certain cases, such as when the material interest cannot be determined, the court fees are fixed by the court.

In some cases, such as labour disputes, etc., a fixed minimal fee is determined. In certain cases, the claimant does not pay any court fees (also common in labour disputes).

In Bulgaria, lawyers are free to determine and agree with clients on their fees. However, attorneys' fees cannot be lower than the amounts determined in the Regulation on Minimum Attorneys' Fees.

Depending on the amount of the material interest of the claim, the minimum remunerations start from BGN 300 (approx. EUR 153) for cases with material interest of up to BGN 1,000 (approx. EUR 511) and reach BGN 830 (approx. EUR 424) + 3% for an amount over BGN 10,000 (approx. EUR 5,112). The Ordinance on the Minimum Attorneys' Fees should be taken into account also in cases where the arrangement between the attorney and the client is on a "success fee" basis, i.e., in no case shall the lawyer's remuneration be below the minimum amounts provided in the ordinance.

There are no civil jury trials in Bulgaria.

Limited.

Representation by an attorney is mandatory in cassation appeals.

Approximate Duration

jury trials

Yes. The Legal Aid Act provides for aid for people who cannot afford the costs of legal proceedings, but who want a counsel and if the interests of justice require so.

Document Production

The Bulgarian courts hear criminal cases in

first instance in a panel composed of:

-a single judge, or

-a judge and two court assessors, if the

criminal offence entails more than 5 years of deprivation of liberty as a punishment, or

-two judges and three court assessors, if the criminal offence entails no less than 15 years of deprivation of liberty or another, more severe punishment.

Approximately 8 - 12 months per instance.

jury trials

Pro Bono System

-Court assessors are randomly selected by the system for each case, and their remuneration is paid for by the budget of the justice system.

-Other participants in a court case are not allowed to appoint court assessors and are

not required to ensure their payment.

Business Crime

Limited.

In some cases.

APPROXIMATE COSTS

Duration depends on the court and the severity

of the punishment provided.

Approximate Duration

Not available in criminal cases.

Lawyers usually charge higher fees (3 - 4 times higher than the minimum ones) in criminal cases.

class actions

Mandatory if (a) the criminal offence entails more than 10 years of deprivation of liberty or a more severe punishment; (b) the defendant does not speak Bulgarian; (c) the defendant is under arrest; and (d) the defendant is not present at

the court hearing.

All documents and papers related to criminal cases are free of charge; no court fees are collected.

Depending on the type and severity of the punishment provided in the Criminal Code for a particular offense, minimum remunerations vary from BGN 400 (approx. EUR 204) to

BGN 3,000.00 (approx. EUR 1,533.00).

Mandatory Representation

by Counsel

BGN 40 (approx. EUR 20). If the request for preliminary injunction is applied for together with a complaint in the main proceedings, no extra court fees have to be paid.

The attorney fees are calculated in the same way as in standard civil proceedings but the amount of the material interest/fixed fee is reduced by 50%.

Approximate Duration

-The Court may order the applicant to pay a security deposit. The deposit usually amounts to approximately 10% of the interest of the case, depending on the judge's assessment.

-The reimbursement of costs incurred by a successful applicant in preliminary injunction matters can only be sought in the main proceedings.

APPROXIMATE COSTS

COURT FEES

ATTORNEYS’

FEES (NET)


Preliminary Injunction Proceedings

-Along with the request for a preliminary injunction, the applicant must provide strong evidence, e.g., documentary evidence and affidavits that can be immediately examined by the court.

-Documents in foreign languages should be presented together with official Bulgarian translations.

Generally, a decision on a request for a preliminary injunction is rendered within a period from 3 days to 3 weeks.

The preliminary injunction becomes an injunction for the full duration of the court proceedings if not lifted.

The usual duration of arbitration proceedings is between 6 and 18 months.

Document Production

Costs include the arbitration court fee, costs of experts and attorneys' fees.

Approximate Duration

Arbitration Proceedings

APPROXIMATE COSTS

Procedural Costs

ATTORNEYS’

FEES (NET)

Limited.

The procedural costs depend on the arbitration court and its fee schedule, the parties' agreement, and the complexity and interest of the case. The arbitration institutions distinguish between domestic and international arbitration cases.

Determined in the same way as in standard civil proceedings.

Approximate Duration

Enforcement of Foreign Judgments and Arbitral Awards

The law distinguishes between enforcement of decisions and acts issued by competent foreign authorities of other EU Member States, and decisions and acts issued by competent authorities of other foreign countries (Third Country Decisions).

Acts issued by courts in EU Member States

(if submitted for recognition): 1 to 2 months until a decision on recognition and enforcement is rendered in first instance; 3 to 6 months if the decision is appealed.

Acts issued by Third Country Courts: 2 to 3 months until a decision on recognition and enforcement is rendered in first instance; 6 months to 1 year if the decision is appealed.

Application for recognition/enforcement: BGN 50 (approx. EUR 25).

Attorneys' Fees are calculated as in standard civil procedures.

APPROXIMATE COSTS

COURT FEES

ATTORNEYS’

FEES (NET)

-Decisions not included in the scope of application of the relevant EU Regulations must be submitted in the original or in a certified copy issued by the court that

rendered the judgment.

-A certified translation of the decision must be submitted.

-For enforcement of awards under the New York Convention, the creditor must provide the court with the authenticated original award or

a duly certified copy thereof and the original

of the arbitration agreement or a duly certified copy thereof.

The duration of execution proceedings depends mainly on whether the debtor has executable assets and whether execution measures are opposed by the debtor.

1 to several years; in very complex cases, a duration of more than 10 years is possible.

Court fees for applications for insolvency of:

Sole trader: BGN 50 (approx. EUR 25);

Company: BGN 250 (approx. EUR 127).

Calculated as in standard civil procedures but not less than BGN 200 (approx. EUR 102).

Approximate Duration

APPROXIMATE COSTS

COURT FEES

ATTORNEYS’

FEES (NET)

Insolvency Proceedings

CONTACT

OFFICE

55 Nikola Vaptsarov Blvd.

BG - Sofia 1407

+359 2 8613 700

sofia@wolftheiss.com

www.wolftheiss.com/offices/bulgaria